Promoting coordination in summary-statistic games

Dominik Erharter ()

Working Papers from Faculty of Economics and Statistics, Universität Innsbruck

Abstract: This paper studies how external incentives can help agents to coordinate in summary-statistic games. Agents follow a myopic best-reply rule and face a trade-off between efficiency and strategic uncertainty. A principal can help agents to coordinate on the Pareto optimal equilibrium by monitoring an appropriate number of agents. The optimal monitoring policy is 'minimally-invasive' - for every strategy profile of the agents, the principal either monitors just enough agents to make high effort a best-reply or does not monitor at all. Furthermore, given the principal's payoffs are supermodular and increasing at an increasing rate, the optimal monitoring policy is monotone in the number of agents who choose high effort.

Keywords: adaptive learning; Markov decision process; coordination failure; order-statistic game (search for similar items in EconPapers)
JEL-codes: C62 C73 D86 (search for similar items in EconPapers)
Pages: 43 pages
Date: 2013-10
New Economics Papers: this item is included in nep-cta, nep-gth and nep-mic
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Persistent link: https://EconPapers.repec.org/RePEc:inn:wpaper:2013-28

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